Kansas hospitals worried about loss of dollars for charity care

Without Medicaid expansion they stand to lose millions, officials say

Many Kansas hospital officials say they are worried that if state policymakers choose not to expand eligibility for the state’s Medicaid program, the hospitals will see a significant drop in the money they receive to help care for patients who can’t or won’t pay their medical bills.

Currently, 64 of the state’s 127 hospitals divide about $51.3 million a year in what are called Medicaid disproportionate share payments.

They use the money, a mix of federal and state dollars, to offset some of the costs of caring for the uninsured.

“It’s a significant amount of funding for us,” said Bruce Witt, director of governmental relations at Via Christi Health in Wichita.

In the current fiscal year, Via Christi Health is expected to receive almost $13 million from the disproportionate share payments, the most of any health care provider in the state.

Under the Affordable Care Act, also known as Obamacare, those payments are to be significantly reduced, starting in October.

“We’re being told that ‘disproportionate share’ won’t be completely phased out, but that roughly 50 percent will be going away,” said Tom Bell, chief executive of the Kansas Hospital Association. “It may end up being somewhere between 50 and 75 percent. We don’t know at this point.”

State option on Medicaid

The law’s design, Bell said, preceded the U.S. Supreme Court’s June 28, 2012 ruling that gives states the option of choosing to not expand their Medicaid coverage to include non-disabled, childless adults whose incomes fall below 133 percent of the federal poverty level.

Since the ruling, governors in at least 10 states – Alabama, Georgia, Idaho, Louisiana, Maine, Mississippi, South Carolina, South Dakota, Oklahoma, and Texas - have said they will not expand Medicaid eligibility.

“Our lieutenant governor is saying he’s not sure that DSH (disproportionate share) is going away because the (U.S.) Supreme Court has said the federal government can’t penalize states for not going along with the Medicaid expansion,” said Shawn Rossi, a vice president with the Mississippi Hospital Association.

“We don’t know if that’s a correct assumption,” Rossi said, “but we are for sure telling our legislators that if DSH goes away, we’re definitely going to need something to take its place. We see a very large number of people who are uninsured.”<a name="continued"></a>

Brownback looking it over

Kansas’ Gov. Sam Brownback has been an outspoken opponent of the Affordable Care Act, has not yet decided whether to implement the Medicaid expansion.

“We do not have a timeline on the decision whether to expand Medicaid as proposed by the federal government,” said Sherriene Jones-Sontag, the governor’s chief spokesperson. “As you know, there are a number of factors to consider, including the fiscal impact an expansion would have on other state core responsibilities.”

Jones-Sontag said the dilemma facing hospitals was the result of a “misguided federal law.”

“While not eliminating DSH, the (Affordable Care Act) does significantly reduce it over time,” she said, “and the effects will vary by state based on a methodology the federal government has not yet released.”

Jones-Sontag said the state had “demonstrated its commitment” to hospitals that care for Medicaid and uninsured patients by creating a “safety net hospital pool in KanCare,” which is the new name of the state Medicaid program as administered by three managed care companies.

Last month, Mark Dugan, chief of staff for Lt. Gov. Jeff Colyer, told members of the Joint Committee on Health Policy Oversight that the administration was developing its own estimate of how much expanding Medicaid might cost the state.

“We’re continuing to study the issue,” he said. “We would like to come to you with our own numbers.”

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Competing estimates

Currently, there are a few competing estimates. The latest, released by the Kansas Health Institute, indicated that approximately 240,000 additional low-income, disabled and elderly Kansans would enroll in a program that currently serves about 380,000, likely costing the state an additional $519 million between 2014 and 2020.

If the governor and Legislature decide to not expand Medicaid, Bell said hospitals would be forced to cut expenses.

“They’d be looking at things like staffing, or maybe doing away with a service that may be popular or needed in the community but isn’t breaking even or covering its costs,” he said. “It will vary from hospital to hospital.”

The hospital association, he said, has asked the governor to address the issue prior to Jan. 1, 2014.

“The whole issue of Medicaid expansion is very complicated and when you add in the disproportionate-share issue, it gets even more complicated,” Bell said. “So we’ve asked the governor to take a serious look at how this would affect our state, our health care providers, and our (Medicaid) beneficiaries. And then let’s do what makes the most sense for Kansas.”

“We’re the safety net”

Dennis Franks, chief executive of Neosho Memorial Regional Medical Center in Chanute, said he’s been encouraging legislators from his area to expand Medicaid.

“We are the largest employer in our county in the poorest region of the state,” Franks said. “We have a lot of people down here who are casualties of the economy and have a difficult time paying for health care, so I’m trying to help legislators understand that if hospitals end up having fewer dollars coming in – that doesn’t mean we’re going to have fewer patients. The two don’t cancel each other out.”

Franks said hospitals throughout the state will be forced to create new revenues. "“We would have to create new revenues, and I don’t know what those would be," he said. "Some hospitals would have to ask for a mill levy, but in southeast Kansas, that isn’t a feasible option."

Franks said hospitals could be forced to sue patients who haven’t paid their bills. But in Chanute, he said, that wouldn’t be a good idea.

“This is the poorest region in the state,” Franks said. “We have a lot of people down here who have great difficulty paying for health care. Now, you can expose them to the legal system but once you do that they’ll just keep putting off health care until they absolutely can’t wait any longer. Then they’ll show up in your emergency room even sicker than they were before, and you still have to see them. You’re just making things worse.”

Federal law prohibits hospitals from turning people away from emergency rooms because of inability to pay.

Some protected

Of the 64 hospitals that divide the state’s disproportionate share monies, two already are protected from major reductions: University of Kansas Hospital in Kansas City, Kan., and Children’s Mercy Hospital in Kansas City, Mo.

Children’s Mercy, which borders the state line, draws from a special fund designed to ensure children access to highly specialized care.

Similarly, the KU hospital’s Medicaid contract is structured in a way that allows it to recoup a sizeable portion of its costs in exchange for providing training opportunities for most of the state’s medical students.

They also would see reduced sums, but would be hit less hard than the private hospitals because of a variety factors, including the fact that they receive state operating dollars.

The three hospitals are expected to receive about $25.2 million in the current fiscal year apart from the $51.3 million going to the general hospitals. Larned State is the biggest beneficiary, collecting about $15.6 million of the total for the state mental hospitals.

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